Limited upside for ONGC: V K Sharma, HDFC Securities

In a chat with ET now, V K Sharma, Head of Business, Private Broking & Wealth Management HDFC Securities shares his views on various stocks.

ET Now: what is your call on ONGC?

VK Sharma: From a fundamental perspective ONGC will gain more if crude prices were to go up rather than coming down. This is because they have to cater only to a small portion of the subsidy whereas they have to cater to their profits reduced if the crude prices fall. From that perspective, it is the government’s ability to direct which is causing a concern for long term investors in ONGC.

The directive that companies, PSUs with good cash component should look at buying other PSUs is not a very good idea. We never know when the directive could come from north block and the company could end up buying or using some of its cash for non-core businesses. So, there is a very limited upside and I am not going to look at ONGC in a hurry.